Egyptian asset management, corporate finance and investment banking firm, Cairo Financial Holding (CHF), has raised its growth forecasts for Egypt’s GDP.
The firm said that in the current fiscal year, GDP will be 3.7%, up from its 2.8% predictions in June 2014, as it noted increased foreign direct investment (FDI) and government measures towards bolstering investment.
In a report issued on 20 January entitled “Egypt – the positive change”, CFH said “signs of recovery are starting to show, reflecting solid moves towards pro-investment strategies”.
The investment bank named a 6.8% GDP growth during the first quarter (Q1) of FY 2015 among the positive changes, as it exceeded a previous estimate of 4.9%.
In October 2014, the International Monetary Fund (IMF) cut its growth forecast for the Egyptian economy to 3.5% from a previous 4.1 predicted in April. This came on the back of security concerns affecting the return of tourism to Egypt.
CFH’s report added that “speedy” steps have culminated in the resolution of 411 disputes with investors. Progress has been made in settling dues to oil companies, which has seen the payment of 40% of the debts.
According to the report, the government has also taken a number of measures which CFH sees as a “constant pro-investment stance”. This has included the issuance of a final draft of the investment law, and the sealing of new investment agreements with key countries worth over $9bn which boosted FDI inflow.
The report also hailed the Central Bank of Egypt’s pre-emptive move to cut policy rates ahead of the Economic Summit in March 2015, saying it confirms Egypt’s commitment to support investment.
The investment firm also saw the moves towards fiscal consolidation, together with eased international oil prices, jointly resulted in a shrinking budget deficit in the fiscal year (FY) 2013/2014 to 12% from 14.1% recorded in the FY 2012/2013.
The subsidies bill will reduce subsidies by 20% to EGP101.2bn in the incumbent year, bringing down oil subsidies’ share in expenditure to 13% down from 18% a year earlier.
As for setbacks, the CFH said delays or cancellation of projects and intensified energy shortage represent could stall its forecasts.